Which of the Following Represents a Situation in Which an Auditor

question 139

Multiple Choice

Which of the following represents a situation in which an auditor is independent of its client?

• A)The audit fee paid by the client represents 10% of the auditor's annual gross revenue.
• B)The auditor takes a personal loan from the president of the company.
• C)The auditor's dependent son holds 25 shares of the client's common stock.
• D)The auditor has not received payment for the previous audit services.

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Definitions:

Substitution Bias

The error made in inflation measurement due to changes in consumer purchasing behavior as they substitute cheaper goods for more expensive ones.

Quality

The degree to which a product or service meets certain standards or satisfies specified criteria, often related to excellence or superiority in performance.

Price Index

A statistical measure that shows changes in the price level of a basket of consumer goods and services over time, indicating inflation or deflation.

Real Terms

A measurement that adjusts nominal values to account for changes in price levels, allowing for the comparison of purchasing power over time.